Russia, Iran Companies Discuss Grain Shipments, Union Says

Private companies in Russia and Iran are discussing grain shipments to the Persian Gulf country, which faces global sanctions over its nuclear program.

It’s unclear how the Russian Iranian talks will end, Alexander Korbut, vice president of Russia’s Grain Union, said in Moscow today.

Iran faces UN, U.S. and European Union sanctions, in response to concerns that Tehran’s nuclear program poses a weapons threat. Iran says the work is for civilian purposes and has said it will block shipments through the Strait of Hormuz, a transit route for about 20 percent of globally traded crude oil.

The grain union’s Korbut said Iran could pay in rubles to bypass EU and U.S. currency restrictions and may send exotic fruits to Russia as partial payment.

“I don’t have doubts that Iran can find rubles, once it wants to do that,” Korbut said.

Delivering grain to Iran may take two to three months after the talks end, according to Korbut. The Caspian Sea, the easiest route for the shipments, will be free of ice by then, he said.

Arkady Zlochevsky, the union’s president, said Feb. 22 Russia may deliver 1 million metric tons of grains to Iran, consisting mostly of wheat. Actual shipments may depend on the size of Iranian cereal stockpiles, Korbut said.

While Russian inventories would permit the sale of as much as 2 million tons to Iran, finding consumers to buy such an amount may be difficult, said Vitaly Bobnev, commercial director of grain trader Valars Group’s OOO Valary unit.

Russian Grain

Iran bought Russian grain only “episodically” in the past because suppliers had difficulty meeting quality standards, according to Bobnev. The Persian Gulf country may loosen its requirements this year to allow more shipments from Russia, he said, adding that Valary is not supplying grain to them.

International companies such as Minneapolis-based Cargill Inc., the commodity trader that’s the largest closely held U.S. company, have continued to ship food to Iran.

“Cargill, like a variety of other multinational companies with a global agricultural footprint, does sell agricultural commodities to Iran, as food is specifically excluded from the sanctions,” Vladimir Sezin, Cargill’s spokesman in Moscow said in an e-mail today.

“We take great care to ensure that these sales respect both the spirit and the letter of the law, while trying to make sure that ordinary people are not deprived of basic foodstuffs,” Sezin said. “From a food security standpoint, this is a potential unintended consequence of the sanctions.”

To contact the reporter on this story: Marina Sysoyeva in Moscow at msysoyeva@bloomberg.net

To contact the editor responsible for this story: John Deane at jdeane3@bloomberg.net

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